The unstoppable rise of collaboration

Rachel Botsman is a global expert on the power of collaboration and sharing-which excludes the middleman-to transform how we live, work and consume.

12 October 2015

Rachel Botsman is one of the world’s leading commentators on the rise of the so-called collaborative or share economy: the radical system where consumers share goods, services, space and money empowered by social networks, mobile devices, online marketplaces and other new technologies.

Botsman describes the collaborative economy as an “economic system of decentralised networks and marketplaces that unlocks the value of underused assets by matching needs and haves in ways that bypass middlemen.”

This crucial elimination of the middleman and thus bypassing of the traditional modes of production, distribution and consumption, have thrust the collaborative and share economy to the forefront of current economic thinking.

Botsman is a World Economic Forum Young Global Leader, was named by Fast Company as one of the ‘Most Creative People in Business’ and Monocle cited her as one of the top 20 speakers in the world to have at your conference.

Her writings and research have featured in the Harvard Business Review, Wall Street Journal, the Economist, and numerous other publications. She has spoken to and advised a diverse range of companies including the Clinton Global Initiative, Google, Microsoft, PwC and many others on the power of the collaborative economy as a “lens to view challenges and unlock new opportunities in the world”.

As we will see the likes of Uber, Airbnb, TaskRabbit (a mobile marketplace for people to hire other people to do jobs and tasks), Etsy, Kickstarter, Vandebron (a Dutch start-up which arranges for consumers to buy electricity directly from independent producers cutting utilities out of the transaction entirely), Cohealo (pioneering collaborative consumption in healthcare), Fon (which enables people to share some of their home Wi-Fi network in exchange for getting free Wi-Fi from anyone of the seven million people in Fon’s network), and numerous others both large and small have disrupted economic models in ways that are only now being understood.Looking really clunky

Looking really clunky

As Botsman says: “Renting, lending, swapping, sharing, bartering, gifting through technology,” is taking place in ways and on a scale simply not possible before the Internet.

In the five years since Botsman and her co-author Roo Rogers wrote their groundbreaking book Collaborative Consumption things have moved on remarkably fast. “When we wrote the book we had the likes of eBay and Craig’s list,” says Botsman, “which now look really clunky compared with what we see today.”

When Observe caught up with Botsman she was passing through London en route to another round of lectures and talks as well as embarking on teaching the first-ever MBA course on the collaborative economy at Oxford University’s Saïd School of Business.

It’s a timely moment for Oxford to offer such a course. According to Forbes, “The revenue flowing through the share economy directly into people’s wallets will surpass US$3.5 billion this year [2014], with growth exceeding 25 per cent.At that rate, peer-to-peer sharing is moving from an income boost in a stagnant wage market into a disruptive economic force.”

“At a macro level,” says Botsman, “what is causing change in a way that we are just starting to understand is a big shift from top-down, centralised organisations that control the creation and distribution of goods towards distributed marketplaces and networks where the creation, the access and the distribution of goods look very different.”

What this means in a disruptive age, says Botsman, is that there is a “fundamental change in customer behaviour that can’t be reversed”.

Botsman continues: “Take Airbnb.

People originally saw it as a way for people to share homes but what is fascinating is how technology created not only efficiency but also the trust that meant they didn’t have to build a portfolio of hotels or accommodation but could facilitate access to inventory that already existed and, through that, they could scale very rapidly. But they could also give people an entirely new experience – and in a very short window of time they are changing customer behaviour around travel.”Rethinking from A to B

Rethinking from A to B

Botsman adopts the same principle for Uber, the collaborative business that allows users to hire a taxi, private car or rideshare directly from a mobile phone, in minutes, using its app. “It [Uber] is really frightening to people because it’s gone into a sector that really hasn’t changed for 50 years – taxis and transportation. People were suddenly saying ‘Oh my God, this will completely rethink the way we get from A to B’.”

Botsman believes these new players aren’t just rethinking transportation or hospitality “but rethinking supply and demand and rethinking where customers get products and services from and who they trust in ways that can transform not just taxis or hospitality but a bigger behaviour.”

However, this brave new collaborative world does have its complications.At the time of writing Uber’s foray into France hadn’t exactly gone according to plan. Uber closed its ridesharing service, UberPop, in Paris, after the arrest of two executives and a series of increasingly disruptive protests against the company in France.

The Guardian newspaper reported that the company had made the decision as a result of “intimidation, violent protests and organised aggression against UberPop drivers and users … due to a minority of out-of-control individuals. Uber does not wish to run the slightest risk to UberPop drivers and passengers,” it added.

Despite this unexpected and violent reaction to ride sharing collaboration, 10,000 drivers have signed up for the service in France. Uber said: “We understand that new technology is disruptive: not just for established companies, but for the people who work in them and their families.”

“If you take this principle of access over ownership,” says Botsman, “and shared access to resources [see Vandebron] it can have massive applications in emerging markets where it can be anything from there isn’t a banking or transportation infrastructure, because you can bypass many of the traditional models.M-Pesa is a really good example. You can directly lend money through a mobile phone and bypass the bank all the way through.”Democratising access

Democratising access

In a recent investigation into mobile finance, the Economist said: “In Africa, only one in four people has a bank account but eight in 10 have access to a mobile. An early fintech success was M-Pesa, a Kenyan phonebased payments scheme launched in 2007 by Safaricom, a telecoms group. By knitting together a network of agents selling airtime into something akin to a banking grid, the scheme opened up cheap and instant payments to the masses. It is now used by three-quarters of Kenya’s 22 million adults.”

What about the people who run these new organisations? Such innovative businesses have human capital needs that are outside of the norm. Says Botsman: “The people actually running and building these companies have a very different DNA.Many of those I have spent time with recognise the relationship the customer (if you can call them that) and the company wants is fundamentally different. For Airbnb there is no distinction between community and company: the hosts, the guests, the employees are all seen as one big organisation. You may be an employee one day, a host or guest another.

“The traditional way of thinking is that there’s a firm line between employees and the people you provide goods and services for, so they have to structure these companies completely differently. Customer experience, trust and safety, they’re the largest divisions in these businesses.”

Botsman knows that “these guys” (at Airbnb, Uber et al) “are incredibly commercially savvy but they think completely differently about organisational culture and structure. Traditional roles are being redefined or completely fractured because they have multiple dimensions.”Future of work and jobs

Future of work and jobs

According to Botsman, over the next couple of years the “future of work, the future of jobs, the rise of an independent, more distributed labour force is going to become a massive topic of conversation. What I am starting to see, and I really encourage this in organisations, is the behavioural changes: how does this change the way I think about something that in turn leads to a bigger system change.”

Ultimately for Botsman it’s about “having the leaders in place that can re-imagine the way value is going to be created and then consumed.”

rachelbotsman.comWhat’s Mine Is Yours: The Rise of Collaborative Consumption (2010) by Rachel Botsman and Roo Rogers is available now